Unknown impact of Brexit worries feed company in Northern Ireland

While Brexit could bring trade issues, a feed company official says one benefit would be access to genetically modified crops approved by the U.K. but not in Europe. | Chris McCullough photo

The divorce of the United Kingdom from the European Union could herald a period of reduced feed costs for Northern Ireland’s livestock farmers if trade negotiations work out in their favour.

Post Brexit, Northern Ireland will be the only part of the U.K. that physically borders the European Union (Ireland), which will present trading challenges between the two Irish jurisdictions.

For feed companies, however, Brexit brings a chance to import grains from countries outside the EU that will maintain tariff-free trading agreements with the U.K.

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But, for the feed companies based in Northern Ireland, Brexit may make exporting feed to the neighbouring Republic of Ireland costly, depending on the trading arrangements that are developed.

Thompsons Feeds is known as the largest multi-species feedmill in Europe and is based in Belfast, Northern Ireland.

Chief executive officer Declan Billington said Brexit could ultimately give the industry access to genetically modified crops approved in the U.K., still to be approved by the European Commission.

“If I was to sum up Brexit in one word, it would be uncertainty. Uncertainty in every aspect of our business,” Billington said.

“With 30 percent of Northern Ireland, production exported outside the U.K. and with EU tariffs on milk and beef products operating in the 50 percent range on exports to Europe, including the Republic of Ireland, exports become impossible without a trade agreement.

“However, the stumbling block of U.K. rejecting the European concept of free movement of people, makes free access to the single market of Europe unlikely.”

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He said if the U.K. ultimately pulls out of the EU, border crossings will once again have a significant impact, with exporters forced to deal with customs inspection and duty payments.

“Governments on both sides of the border state their commitment to ensure this does not happen, but it is only one of many problems to be resolved in the divorce that is Brexit.”

Billington also said Northern Ireland faces losing access to benefits it now enjoys under Europe’s 53 trade agreements.

“For some of our local companies, losing access to these agreements poses a direct threat to their export businesses including milk powder to West Africa and catering products to our world’s catering companies.

He said there may also be benefits, depending upon what deals the U.K. manages to strike on its own, such as the ability to buy cheaper feedgrains from North America, lower input costs and access to genetically modified crops approved by the U.K. but not in Europe.

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“However, given the 95 euros ($134) per tonne tariff on feed wheat and a price floor of 154 euros ($217) per tonne on (corn), our ability to trade feed and flour across the border into the Republic of Ireland will restrict the extent to which we can benefit from these opportunities in Northern Ireland.

“And to this uncertainty around future trade we need to add currency volatility.”

Despite the challenges, agri-food in Northern Ireland sees a way forward with a report issued by the Northern Ireland Food and Drink Association.

“However, the right policies and negotiating positions need to be deployed and the question is, will the U.K. government listen to Northern Ireland industry? The answer is, as with everything Brexit related, uncertain,” said Billington.

The agrifood sector is Northern Ireland’s biggest private sector employer and export earner with about 75 percent of the business, worth about $7.8 billion, being exported.

Around half of the output is consumed in Great Britain with the remaining quarter finding a home in the EU, principally the Republic of Ireland, and the wider world.

The all-Ireland nature of the feed and food trade means that a hard border between north and south would inflict massive damage on both parts of the island.